Household surveys were undertaken every week for seven months in 2005 to understand acute health symptoms and to estimate health costs associated with pesticide exposure in rural Nepal. The cost-of-illness and avertive action approach was used to estimate costs of pesticide use. The probit regressions fit sickness and avertive actions with exposure to pesticides and other factors. Based on data from 291 households, the study finds that the magnitude of exposure to insecticides and fungicides significantly influenced the occurrence of acute symptoms. The predicted probability of falling sick from pesticide-related symptoms is significantly higher among individuals who apply pesticides compared to individuals in the same household who are not directly exposed. Further, the predicted annual cost of illness as a result of pesticide use is estimated to be Nepalese Rupees 144 per individual. This cost is nearly one-third of the total expenditure on health care services, but is small compared to the increase in farm production costs, thus when faced with a choice between the health care costs and increases in farm production costs, the individual opts for pesticides. However, the costs are nearly eight times higher compared to the population who were not directly exposed. This study suggests that there are acute health impacts of pesticide use; however, because of the low level of the health costs, farm workers may underestimate the effects of pesticides on the human being, and thus they may continue to use pesticides without any safety precautions.